UPDATE 2-German bond yields edge up, biggest weekly rise since Pfizer
* German yields slightly up after U.S. jobs data
* Set for biggest weekly rise since Pfizer vaccine news
* Fitch to review Italy’s credit rating (Adds analyst comment, background)
AMSTERDAM/MILAN, Dec 4 (Reuters) – German bond yields edged up on Friday supported by U.S. yields, which jumped to their highest level since March on a weak November employment report. U.S. 10-year Treasury yields were up 6 basis points as job data was expected to increase pressure on Washington to pass a new round of stimulus to help the coronavirus-battered economy.
A bipartisan, $908 billion coronavirus aid plan gained momentum in the U.S. Congress on Thursday as conservative lawmakers expressed their support and Senate and House of Representatives leaders huddled. “The U.S. yields jumped and German government bonds are up a bit in sympathy, but way less than one could have expected,” Antoine Bouvet, senior rates strategist at ING in London, said.
German benchmark 10-year bond yields were up 0.5 basis point to -0.54%.
Still, up 4.5 basis points this week, German 10-year yields recorded their biggest weekly rise since Pfizer announced three weeks ago that its vaccine was highly effective.
Bets that the vaccine would prove key in helping the global economy had pushed safe-haven 10-year Bunds after Pfizer’s announcement to their worst session since March.
Italy’s 10-year yield was last up 3 basis points at 0.59%, after having nearly touched record lows in early trade. .
Some headlines are likely to have contributed to Friday’s mixed market sentiment.
European Economic Commissioner Paolo Gentiloni said the EU would push on with its 1.8 trillion euro ($2.14 trillion) financial package to revive the bloc’s economy even if Hungary and Poland continue trying to veto the project.
Meanwhile Hungary and Poland dug in their heels in a dispute with the European Union over efforts to link the disbursement of funds with rule-of-law provisions, dashing tentative hopes that a compromise could soon be agreed.
However, the news had little impact on southern European borrowing costs, which have been mostly driven by expectations of additional stimulus at the European Central Bank’s meeting next Thursday.
Some investors are focused on a Fitch Ratings review of Italy that is due out later on Friday.
In April Fitch cut Italy’s credit rating to one notch above junk at BBB- and has been more proactive than other rating agencies in downgrading sovereigns during the COVID-19 crisis. But analysts don’t expect it to take action now that EU and ECB policy support is firmly in place.
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